Major UK banks have opted to keep the £100 contactless payment limit in place, despite the Financial Conduct Authority removing the official cap on card transactions.
Although the FCA scrapped the £100 ceiling to give banks greater flexibility amid rising inflation and evolving payment technology, leading high street lenders including Barclays, HSBC, Lloyds, Nationwide, NatWest and Santander have confirmed they will not raise the limit for now.
Digital banks are taking a similarly cautious approach. Monzo has said it will maintain the current cap, while Starling and Revolut have yet to decide whether to make any changes.
Industry body UK Finance said the lack of immediate action reflects limited consumer demand for higher contactless limits, as well as the need for retailers to upgrade card terminals before larger payments can be processed.
While banks are now free to increase or remove the cap, many continue to allow customers to set their own spending limits, typically in increments up to £100.
Contactless payments remain the most popular payment method in the UK, accounting for 67% of credit card transactions and 76% of debit card purchases. However, the average contactless spend remains relatively low, at just under £18 per transaction.
The FCA said the rule change is designed to encourage innovation while maintaining strong consumer protections. Banks are expected to clearly communicate any future changes and ensure robust fraud prevention measures are in place.
Concerns remain that higher or unlimited contactless limits could increase the risk of fraud, particularly if cards are lost or stolen. The regulator has emphasised that banks must implement safeguards, such as alerts or verification checks, before allowing larger transactions.
There are also worries that higher limits could make it harder for consumers to track spending, potentially impacting personal budgeting habits.
Unlike physical cards, there is currently no spending cap for digital wallets such as Apple Pay, where transactions are secured through biometric verification including facial recognition or fingerprint authentication.